Hindujas to renew its power foray with Vizag 1040 MW project…

The Hinduja Group plans to renew its thrust into India's power sector with the much delayed Vizag project in India expected to be fully operational by September 2013.

The Vizag project picked up steam in 2008, a decade after it was proposed, but was hampered by regulatory issues since.

The 1040 MW project, being executed by the group's power sector vehicle, Hinduja National Power Corp, is part of a plan to produce 10,000 MW for power hungry India over 5 to 6 years.

Mr Ashok Puri MD at Hinduja National Power told reporters that the first phase of the USD 1.2 billion project comprising one unit of 520 MW will be commissioned by June 2013.

The group has already invested 14 billion rupees in the project which sources coal from Mahanadi Coalfields in the neighbouring Orissa state, a unit of Coal India Ltd.

Mr Puri said that the firm is looking for sites in Maharashtra, Karnataka, Gujarat and Orissa For new projects where it can get requisite fuel linkages.

Mr Abin Das group director said that the Hinduja Group, which has interests across banking, media, power and automobiles in India, remains committed to its INR 500 billion investment for the country, bulk of which would be power focused.

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Reliance, Tata Face Energy Caps in $3 Billion Efficiency Market in India…

According to reports, India has set targets for companies including Reliance Industries Ltd. (RIL) and Tata Steel Ltd. (TATA) on energy consumption reductions in preparation for a $3 billion-a-year market for trading efficiency credits.

Companies have been notified of their targets and audits of their energy consumption have started, said Ajay Mathur, director of the Bureau of Energy Efficiency.

“By mid-2012, we should be able to start issuing tradable certificates,” Mathur said in an interview this week. The government may disclose the individual targets assigned to 563 facilities, including oil refineries, steel plants and paper mills in its official gazette as early as next month, he said.

The program aims to lower fossil fuel use in the world’s third-largest energy consumer by forcing eight industries to reduce their power needs. Companies that save more power than required earn credits which they can trade on power exchanges to others seeking to meet their targets.

Other companies with facilities falling under the program include NTPC Ltd. (NATP), Hindalco Industries Ltd. (HNDL), Essar Steel Ltd., JSW Steel Ltd. (JSTL) and Reliance Power Ltd. (RPWR), according to a list from the bureau.

By using energy more efficiently and reducing losses, India may avoid building 10,000 megawatts of new power capacity, saving 1 trillion rupees ($19 billion), according to the power ministry. That’s the equivalent of about 9 new nuclear reactors.

Over three years, the energy-efficiency program should reduce power consumption across the eight industries by about 5 percent, Mathur said. India became the world’s third-largest energy consumer after topping Russia in 2009, the International Energy Agency said in its annual outlook this month.

Trading of the credits may create a market worth $3 billion annually, according to Baman K. Mehta, chief executive of Darashaw & Company Pvt., a Mumbai-based investment bank. Within five years, that could climb to $16 billion, Mathur has estimated.

India’s trade in international carbon credits could be affected because of an impasse over the renewal of the Kyoto Protocol, the world’s only climate treaty that created the carbon market.

Annual climate negotiations begin next week in Durban, South Africa. Japan, Canada and Russia are expected to refuse an extension of the treaty requiring industrialized nations to cut emissions through 2012.

With the future of a global emissions trading market at risk, India is pressing ahead with domestic environmental trading programs to slow emissions and promote clean energy.

In April, trading began in India’s renewable energy market that requires power distributors and large energy consumers to buy a certain amount of their electricity from clean sources like wind farms and hydropower plants.

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Power Finance Corp sets up monitoring cell to keep watch on loan-book…

In the wake up difficulties being faced by the energy sector, state-run Power Finance Corp (PFC) has set up a project monitoring cell to keep an eye on the stressed loan portfolio, a top official said today.

"Though the idea of monitoring cell was conceived in 2009, we have recently set up a separate cell for this to better check the progress of the projects to which we have lent money,"

Monitoring of the projects would be in a broader sense to see the debt servicing capacity of borrowers, he said. "We will do monitoring in financial terms, which will be different from a typical project monitoring unit that emphasises on execution. We will keep an eye on the critical milestones set by the company and see whether they are met or not."

Currently, financial institutions are worried about the advances extended to electricity boards of Tamil Nadu, UP, Rajasthan, Bihar, Haryana, Madhya Pradesh and Punjab, which according to rating agency Crisil, are the most vulnerable.

As per Crisil, losses of discoms rose 24 per cent to Rs 27,500 crore between 2006-07 and 2009-10, which could have risen to Rs 35,000-Rs 40,000 crore last fiscal, mainly because of problems in utilities, which are not free to revise the already low tariffs. Also, many green-field projects are stuck due to land issues and coal linkage problems.

"Many of the green-field projects are stuck due to coal linkage and land acquisition related issues. Though we don't have any control over these issues, we will try to minimise the risk by diversifying our portfolio," he said.

PFC posted net profit of Rs 419 crore in the second quarter, down 40 per cent from 700.8 crore in the year-ago quarter on the back of forex losses, despite 24 per cent rise in income to Rs 3,142 crore from Rs 2,531 crore.

Gross NPA rose 0.22 per cent in the first half of this fiscal from 0.02 per cent in the same period last year. Net NPA rose to 0.19 per cent during the period from 0.01 per cent a year ago.

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Delayed Indian Solar Projects May Lose Contracts, Official Says…

According to reports, two of India’s first solar projects under a state program offering favorable tariffs to build 20,000 megawatts of capacity suffered delays, a ministry official said, adding developers may lose contracts if deadlines are missed.

“Two of the projects are behind schedule,” said Tarun Kapoor, who is responsible for overseeing the program as joint secretary at the Ministry of New and Renewable Energy.

Entegra Ltd. (EIL), whose majority shareholder is MW Corp Pvt., hasn’t yet begun building a 10-megawatt solar-thermal plant in Rajasthan, Kapoor said in an interview in New Delhi yesterday.

Enterprise Business Solutions was also given a two-month extension after being fined for missing an October deadline to build a 5-megawatt photovoltaic plant in Punjab, he said, adding that construction at the site has since begun.

Entegra Chairman Mukul S. Kasliwal said the company faced problems raising financing for its 2 billion rupee ($38 million) development because of “unreasonable” government restrictions on using a so-called special-purpose vehicle for the project. The company expects to resolve the issue and complete the plant by its 2013 deadline, he said, declining to give a timetable.

“We haven’t started because we’re not going to do something that doesn’t make sense financially,” Kasliwal said in a phone interview today. “Had we been allowed to function as an SPV, then we would’ve finished financing long ago.”

The bar on the vehicles, which allow companies to isolate risks from funding large projects, means Entegra is limited to raising smaller loans backed by its balance sheet, he said.

The company, which at the same time is building a 400- megawatt hydropower plant in Madhya Pradesh state, has already invested 100 million rupees in the solar project and is in talks over alternative funding, Kasliwal said, declining to elaborate.

Neither Kapoor nor A.K. Maggu, general manager of state-run power trader NTPC Vidyut Vyapar Nigam Ltd., was able to provide contact details for Enterprise Business Solutions. The trader signed power contracts with the developers. Bloomberg was unable to find a website or contact for EBS in an Internet search.

Both projects are part of the “migration” program to build a first round of plants under the national Solar Mission and boost solar capacity by the equivalent of about 18 nuclear power plants by 2022. Under the migration plan, projects get deals to sell power for as much as 17.91 rupees a kilowatt-hour. That’s about four times the average wholesale fee for coal power and above the average 12.16 rupees for more than 600 megawatts of projects awarded in India’s first solar auction last year.

Developers will lose their preferential tariffs if they fail to complete their projects on time, Kapoor said.

The central government plans to award more solar permits next year to meet its target of adding at least 3,000 megawatts of capacity in the five years from 2013, he said. Officials at the finance, power and renewable energy ministries are in talks over how much capacity should be auctioned in 2012, Kapoor said. “In a few months, we should have a clear picture,” he said.

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